Indianapolis Lays Off Some 535 To Counter Federal Funds Loss

The Indianapolis Public Schools, in an effort to avert a $14-million
deficit projected for 1986, has sent layoff notices to 395 teachers and
140 support employees, and plans to move 40 administrators out of their
jobs and into the classroom.

The layoffs, which represent a reduction in force of almost 10
percent in Indiana's largest school district, will take effect at the
start of the 1985-86 school year, pending a final vote of the school
board scheduled for April 30, according to Carolyn Day, a spokesman for
the 53,000-student district.

And although it is not uncommon for school districts to send layoff
notices to employees in the spring in order to meet state and local
deadlines that prohibit layoffs after a particular date, Ms. Day said
the district's decision represents an accurate assessment of how many
staff cutbacks are required to balance the district's $170-million
budget.

The Indianapolis Education Association, an affiliate of the National
Education Association that counts as members more than 2,000 of the
district's 3,086 teachers, has termed the action "inappropriate" and
has called on the district to seek alternatives to balance its
budget.

'Tight Time' for Districts

The financial situation that precipiated the layoffs is in part the
result of the phasing-out of $10 million annually in state and federal
funds provided for the district's 1981 court-ordered desegregation
plan.

Indianapolis's troubles are likely to be replayed nationwide in
districts that have invested considerable resources in desegregation
plans, are seeing the federal funds to pay for them phased out, and
lack state support for such efforts, according to Samuel B. Husk,
executive director of the Council of the Great City Schools.

"Every school district which has had to pay for desegregation out of
its own pocket and out of the federal grants is probably going to go
through a tight time over the next 6 to 12 months," Mr. Husk said.

'Soft Money'

The district's $14-million shortfall came about as a result of its
use of what Ms. Day termed "soft money"--funds that were available for
a short period of time under "unusual circumstances"--to pay for
recurring expenses.

First, the district was told by the state tax board in 1983 that it
had to spend $6 million that had been accumulating for several years in
a building fund, Ms. Day said. The school system got an additional
$10.5 million for this year as a result of a one-time budget-balancing
maneuver.

It is the money the district received to carry out its court-ordered
desegregation plan--some $9 million in state aid and $1 million in
federal grants given annually from 1981 to the present--that represents
the largest loss in revenue, school officials say. The federal
government's desegregation aid was consolidated into a block grant in
1981, and Indiana has eliminated its aid program.

The district used those funds for instructional improvement as well
as for transportation. For example, teachers were hired to reduce class
sizes and teacher loads, according to Ms. Day, and funds were spent to
bring the district into compliance with Project Prime Time, a state
program designed to reduce student-teacher ratios in the early
grades.

As a result, students' test scores have gone up and achievement
levels are rising, Ms. Day said. But she predicted that the loss of the
"soft money" spent on these efforts could translate into a decline in
achievement for the district's students.

"We've made so much progress in the last three years in terms of
achievement scores, so these things are tough," said James A. Adams,
superintendent of schools. "Any time you have to increase class sizes,
you have a negative impact on the system."

Cutbacks Required

Like Indianapolis, other districts that instituted programs required
under desegregation orders will now have to cut back as they begin to
absorb more of those costs themselves, according to Mr. Husk.

"What's happening is that emergency school-aid money is finally
bleeding out and the districts are having to absorb those costs
themselves," he said.

Districts might be able to avoid such belt-tightening, Mr. Husk
said, if states contribute sufficient resources to help them replace
the lost resources. The Milwaukee and St. Louis districts, for example,
are seeking state funds through the courts.

The other way school systems might be able to avoid cutting staff
members and programs, Mr. Husk said, is if the Congress, as expected,
rejects President Reagan's proposed elimination of $75 million in
federal funds for magnet schools.

Tax Referendum

In addition to serving layoff notices, the Indianapolis board of
education plans to ask local residents to approve a referendum in
December that would increase property taxes.

Mr. Adams said he is hopeful that passage of such a measure would
enable the district to rehire some of the laid-off teachers. Ninety
percent of those who will be laid off, he noted, were hired in the last
three years as part of the district's commitment to school-improvement
programs.

Meanwhile, the layoffs will enable the system to balance its budget
and will provide an additional $900,000 for unemployment compensation,
for which all laid-off employees are eligible, according to Ms.
Day.

But the iea, which has voiced strong opposition to the district's
layoff plans, has urged district officials to pursue alternate
budget-cutting options before laying off the teachers.

Thomas J. Feeney, president of the iea, said the union has
recommended that the district appeal to the state legislature to
increase its appropriation. It has also called on the district to avoid
laying off teachers until the property-tax referendum results are in,
and, as a final measure, to appeal to the state tax-control board to
transfer to its general-fund account money that is earmarked for
operating expenses.

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